World Trade Organisation

The World Trade Organization (WTO) is the only international trade body that deals with international trade practices. It ensures that the member countries engage in smooth, free, and fair global trade. WTO was officially founded on 1st January 1995 with its headquarters in Geneva, Switzerland. India is a member of the WTO since 1st January 1995. Currently, it has 164 member countries. 

WTO: How Did It Begin?

The WTO was carved out of the General Agreement on Trade and Tariffs (GATT), established in 1947. GATT was associated with the International Monetary Fund (IMF), as well as the World Bank. GATT was introduced after the end of World War II in order to facilitate global trade by reducing tariffs and lowering trade barriers. 

The objective behind GATT stems from the Most-favoured-nation (MFN) clause, in which when one country is given this MFN status by another, it gives the chosen country privileged rights for trading. This method ensured that all member countries were given an MFN-like status quo so as to prevent any trading advantages by one country over the others.

In 1995, WTO replaced GATT as the international trading body. The current governing rules come from the Uruguay Round of GATT, which took place from 1986 to 1994.

Aims of the WTO:

• To promote an international commerce system
• To ensure smooth, free, and fair global trade
• To create economic stability and peace
• To reduce tariffs and lower trade barriers

WTO Agreements and Negotiations

To ensure that the member countries engage in smooth, free, and fair global trade, WTO has set up several rules and negotiations in order to establish a common set of international trade laws to make the member countries abide by them.

Goods:

It has specific laws related to agricultural goods, product standards, subsidies, etc. The most recent addition to this list of agreements is the Trade Facilitation Agreement in 2017.

Services:

The systems providing services like hotel chains, tour operators, telecommunication companies, banks, etc. have their own set of rules, known as the General Agreement on Trade in Services (GATS). The GATS may vary according to each member country’s willingness to open its markets for specific sectors.

Trade Monitoring:

The Trade Policy Review Mechanism of the WTO was made in order to promote transparency and develop a better understanding of the WTO members’ trade policies. All the member countries are required to go through periodic supervision. Apart from that, the WTO regularly monitors global trading practices.

Intellectual property:

The Intellectual Property Agreement of the WTO works with respect to patents, copyrights, trademarks, or some confidential information regarding trade secrets; all come under intellectual property.

Settlement of Dispute:

To ensure smooth trade practices, the WTO has laid down several agreements related to resolving trade conflicts. The members bring forth their issues to the WTO if they think that their WTO agreement rights are being compromised in one way or the other. The settlement initially begins by encouraging the members to settle their differences through dialogue and consultation. If this system goes in vain, then the WTO goes in accordance with a set procedure, headed by an expert panel and the members involved in the dispute can then appeal legally.

Pros and Cons of the WTO

With the advent of globalisation, the functioning of the WTO has been seen in both positive and negative ways. It has been in the middle of issues of free trade vs protectionism.

• The efforts by the WTO have expanded global trade by a big margin. Multinational companies (MNCs) are the ones most benefited by the WTO trade agreements, as there have been free trade practices as well as a decrease in trade conflicts, seen as good signs of a growing global economy.
• On the flip side though, the same agreements have adversely affected the local communities and poorer member countries. With the lowering of trade barriers and free trade policies, the local products face stiff competition from the overseas products, and as a result, the former mostly lose out. Protectionism from such practices is key to sustaining their economies. It has been also seen that these trade policies have made the gap between the rich and poor members wider- the rich becoming richer and the poor, poorer.

Conclusion:

In this article, we saw an overview of the WTO. It is the only international trade body that deals with international trade practices. It ensures that the member countries engage in smooth, free, and fair global trade. In 1995, WTO replaced GATT as the international trading body. WTO has set up several rules and negotiations in order to establish a common set of international trade laws. These agreements cater to a multitude of aspects like goods, services, trade monitoring, intellectual property, and settlement of disputes. Though such negotiations have been greatly beneficial for the well-off member nations, the local communities and the poorer members are only the adverse effects of these clauses.